NZ dollar hold gains vs. euro on optimism for Greek bail-out

Nov. 20
(BusinessDesk) - The New Zealand dollar held gains on
optimism European finance chiefs will sign up to the next
tranche of Greece's multi-billion euro bail-out and after
France had its credit rating downgraded.

The kiwi traded
at 81.84 US cents at 5pm in Wellington, unchanged from 8am
and up from 81.34 cents yesterday. It rose to 63.91 euro
cents from 63.72 cents yesterday.

Stocks rallied across
Asia as investors remained optimistic euro-zone finance
ministers will grant Greece the next tranche of its rescue
package at a meeting in Brussels by granting it more time to
comply with harsh austerity measures. Japan's Nikkei 225
index rose 0.2 percent in afternoon, while Hong Kong's Hang
Seng gained 0.9 percent. The euro was also knocked by
Moody's Investors Service cutting France's sovereign credit
rating a notch to Aa1.

"If they grant Greece more time to
meet the fiscal demands, they get a 30 billion euro funding
gap which will require restructuring or a greater bailout -
that's the bigger issue," said Chris Tennent-Brown, FX
economist at Commonwealth Bank of Australia in Sydney.

"The French downgrade was negative news for the day, but
everyone is optimistic - they think something positive might
come out of the finance minister meeting" which bolstered
the kiwi and Australian dollars, he said.

Investors have
also been optimistic about the prospects US legislators will
cut a deal to stave off US$607 billion of enforced federal
spending cuts and increased taxes, which are seen as likely
to push the world's biggest economy back into recession.

The kiwi traded at 66.49 yen from 66.08 yen yesterday
after the Bank of Japan kept monetary policy steady ahead of
next month's general election, and after expanding the
central bank's balance sheet through more asset purchases
last month.

Minutes from this month's Reserve Bank of
Australia meeting showed the board is considering more rate
cuts to spur the economy if the resources boom ends. The
bank unexpectedly kept the target cash rate at 3.25 percent
this month, and governor Glenn Stevens is scheduled to give
a speech updating his view on the economy today. The kiwi
rose to 78.59 Australian cents from 78.38 cents yesterday.

The trade-weighted index advanced to 73.43 from 73.09
yesterday. The currency gained to 51.43 British pence from
51.09 pence
yesterday.

The Wellington-based BusinessDesk team led by former Bloomberg Asian top editor Jonathan Underhill and Qantas Award-winning journalist and commentator Pattrick Smellie provides a daily news feed for a serious business audience.

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